This concept necessitates that the life of business ought to be isolated into a equal parts which are known as Accounting Periods.

This Concept requires consistency of Accounting periods.Explanation of Accounting Period ConceptThis concept helps in evaluating the profit or loss and financial position of a business for a specific period.

If there are diverse accounting periods then different issues can emerge like in the calculation of profits, comparability of various incomes and expenses etc.

Thus to study the results of a business, the life of a business is isolated into brief times of equivalent length.

Each such period is called as accounting period.While genuine profit or loss of a business must be resolved when the business finally closes down, it would be unwise to wait for that.

Accounting information is required by all worried on a regular basis and should, accordingly, be set up on a ongoing basis.